U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
Quarterly Report Under
the Securities Exchange Act of 1934
For Quarter ended: December 31, 1996
Commission File Number:0-24590
SDT Holding Corporation
(Exact name of small business issuer as specified in its charter)
Colorado
(State or other jurisdiction or incorporation or organization)
84-1275559
(IRS Employer Identification No.)
1 Stoke Road
Guildford
Surrey, England
(Address of principal executive offices)
GU1 4HW
(Zip Code)
+44 1483 458300
(Issuer's Telephone Number)
2851 South Parker Road, Suite 720
Aurora, Colorado 80014
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been
subject to such filing requirements of the past 90 days:
Yes ___X____, No________.
The number of shares of the registrant's only class of common stock
issued and outstanding, as of December 31, 1996, was 22,000,000
shares.
<PAGE>
PART 1
ITEM 1. FINANCIAL STATEMENTS
The unaudited financial statements for the six month period ended
December 31, 1996, and for the last quarter of 1995 are attached
hereto. European Business Group (UK) Plc, the entity which engaged
in the "reverse merger" with the Company effective October 31,
1996, was not formed until August 1995. As a result, comparison
figures are not available from the years prior to that time.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
Financial Statements and notes thereto included herein.
SDT Holding Corporation (the "Company"), is a company incorporated
pursuant to the laws of the State of Colorado on June 21, 1990.
The Company did not undertake any business activities relevant
thereto and in October 1996, the Company successfully completed a
"reverse merger" with European Business Group (UK) Plc, an English
corporation ("EBG"). The Company's principal business activities
are now within the leasing and billboard business. These
businesses deal mainly with (i) hire-purchase agreements for marine
sea containers, and (ii) license rights to billboards.
Overview
SDT Holding Corp. is a holding company which conducts it operations
through its 100% owned UK subsidiary, EBG, which in turn operates
through 15 wholly owned subsidiaries. The Company's business is as
described in the Financial Statements under notes 1 and 2 and
incorporated herein as if set forth.
EBG came into existence in August 1995 as a result of a merger
between two independent businesses. Therefore comparison figures
are not available for the periods prior to the merger.
The following financial information and discussion covers the
results of the three month period from September 1, 1996 to
December 31, 1996. The result of operations compares with a
similar period for EBG prior to the reverse merger. As EBG had not
prepared quarterly reports before October 1996, the comparative
figures have been extracted from the accounting material available
and are the only figures available.
Comparison of Results of Operations for the three months ended
December 31, 1996 and 1995
Revenues for the three months of October, November and December
1996 were in sterling 8,443,000.00, which is an increase of
Pound/Sterling 768,000 compared to revenues for the similar period
from 1995.
<PAGE>
The result is an increase in revenues of 10% pre-tax for the three
months ended December 31, 1996. The increase in net-profitability
pre-tax is 14% and the net result after tax increased by 16%.
During the three month period between September 1, 1996 and
December 31, 1996, cost of sales remained relatively constant. In
1996, cost of sales was Pound/Sterling 5,514 compared to
Pound/Sterling 5,154 for the similar period in 1995, an increase of
approximately 6.5%. Selling, general and administrative expenses
increased from Pound/Sterling 543,000 for the three month period
ended December 31, 1995 to Pound/Sterling 681,000 for the three
months ended December 31, 1996, an increase of approximately 20%
due to the addition of more staff and costs associated with a
consolidation of management of the Company following the reverse
merger. Management believes the Company's business will continue
to expand and increase, but in management's opinion the
administrative apparatus of the business is in place and it should
not be necessary to increase staff substantially in the future as
present staff should be able to cope with increasing demand.
Liquidity and Capital Resources
As of the date of this report, the Company finances its operation
primarily from the annual proceeds and revenue of its business. At
August 31, 1996, the Company had loans outstanding of
Pound/Sterling 10 million in respect of the acquisition of
subsidiary undertakings, including the following:
Pound/Sterling
Loan for the purchase of Lupa Marine (UK) Ltd 7,800,000
Loan for the purchase of Industrial
& Trade Consultants Ltd 2,200,000
-----------
10,000,000
===========
The original loan terms were:
The loan shall be repayable on demand and in any event not later
than 3 years from the date of the loan agreement.
Date of Agreements Name of Lender Amount of Loan
Pound/Sterling
September 4, 1995 Holmes Finance Inc. 2,200,000
September 4, 1995 Stiedl Foundation 7,800,000
-----------
10,000,000
===========
Both lenders have stated that they will not seek repayment until
such time as the Company has surplus cash available.
On December 4, 1996, an agreement was entered into with Northbridge
Finance Ltd and Roseworth Financial Services Ltd whereby EBG
assigned an amount of Pound/Sterling 1,410,000 due to EBG by
Nadelar Business Corporation. As consideration for the assignment,
EBG was released from its obligations under a loan agreement for
Pound/Sterling 2 million.
<PAGE>
Subsequent Events
On April 10, 1997, EBG entered into two loan agreements with London
Trust Bank Plc acting as agent for a proposed syndicate of banks
for Pound/Sterling 3 million and Pound/Sterling 5 million,
respectively, for the purpose of refinancing its acquisition of ITC
Ltd (Pound/Sterling 2.2 million - see above). The remainder is to
be utilized for working capital purposes.
Management has considered future cash flow from existing and
expected additional revenue and forecast that its obligations under
the agreements can be met. The Pound/Sterling 3 million loan is to
be repaid in eight equal quarterly installments after the drawdown
date (expected to be on or about May 1, 1997).
The Pound/Sterling 5 million loan has similar terms but it is not
expected to be utilized unless the right investment opportunity
arises. As a result of these loans, the Company does not foresee
at present any circumstances that would require it to raise any
additional capital in the market over the next 12 months.
Trends
The sales of the Company's products, particularly Hire Purchase /
Leasing products, have been on the increase over the past year and
seems to continue to increase. At the same time, the UK businesses
are operating in the billboard market and are presently exploring
and developing opportunities for the billboard concept. The
management is optimistic and believes that the turn-over related to
the billboard licenses will increase in the future and be more
dominant in the accounts where the hire-purchase/leasing business
has been the prime income producer up to now. However, there can
be no assurances that the Company's billboard licensing business
will be profitable in the near future, or at all.
PART 11. OTHER INFORMATION
ITEM 1. Legal Proceedings - None
ITEM 2. Changes in Securities - None
ITEM 3. Defaults upon senior securities - None
ITEM 4. Submission of matter to a vote of security holders -
None
ITEM 5. Other information - Effective April 14, 1997, Carsten
Iversen tendered his resignation as President of the
Company and was replaced by Bjorn Stiedl. Mr. Iversen
continues to hold a position as a director of the
Company. In this connection, the Company was also
informed that an Indictment has been issued against Mr.
Stiedl by the Danish Courts in connection with tax
charges of Danish companies with which Mr. Stiedl was
involved relating to deferred tax issues. However, Mr.
<PAGE>
Stiedl denies any wrongdoing and intends to vigorously
defend against these allegations.
ITEM 6. Exhibits and Reports on Form 8-K - On September 19,
1996, the Company filed a Form 8-K, advising the
execution of a letter of intent to engage in the
"reverse merger" of EBG. Thereafter, on or about,
November 14, 1996, the Company filed another Form 8-K
advising of the closing of the transaction of EBG.
Subsequently, on or about, April 16, 1997, an amendment
to the Form 8-K, filed on November 14, 1996, was filed
which contained the audited financial statements of
EBG.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly
authorized.
SDT Holding Corporation
(Registrant)
Dated: May 1, 1997
By: s/Bjorn Stiedl
Bjorn Stiedl
President
<PAGE>
<TABLE>
SDT Holding Corp.
Consolidated Balance Sheet
- -----------------------------------------------------------------
<CAPTION>
December 31st 1996 1995
- ------------- ----------- -----------
<S> <C> <C>
Pound/Sterling Pound/Sterling
'000 '000
Assets
Current Assets:
Cash 4 52
Accounts receivable - trade 187 378
Accounts receivable - other 4,602 4,000
Inventories - marine containers 16,348 16,056
Current maturities of instalment
contracts receivable 24,066 19,565
Prepaid expenses and other 218 200
----------- -----------
Total current assets 45,425 40,251
----------- -----------
Property and equipment
Marine containers 42,996 36,000
Office furniture and equipment 178 105
Leasehold improvements 55 38
Vehicles 30 -
----------- -----------
43,259 36,143
Less accumulated depreciation
and amortisation 1,246 300
----------- -----------
Property and equipment, net 42,013 35,843
----------- -----------
Other assets:
Installments contracts receivable,
less current maturities 130,778 54,039
License rights 59,000 59,000
Goodwill, net of accumulated
amortisation of Pound/Sterling
78,848 808 867
Other 37 -
----------- -----------
Total other assets 190,623 113,906
----------- -----------
278,061 190,000
=========== ===========
</TABLE>
<PAGE>
<TABLE>
SDT Holding Corp.
Consolidated Balance Sheet
- -----------------------------------------------------------------
<CAPTION>
December 31st 1996 1995
- ------------- ----------- -----------
<S> <C> <C>
Pound/Sterling Pound/Sterling
'000 '000
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable - trade 60 20
Accounts payable - other 8,323 10,200
Accruals and deferred income 17,841 11,033
Taxes and other 1,444 400
Current portion of capital
lease obligations 19,876 18,900
----------- -----------
Total current liabilities 47,544 40,553
Capital lease obligations,
less current portion 130,228 54,077
Accruals and deferred income 37,357 34,940
Deferred income taxes 4,194 200
----------- -----------
Total liabilities 219,323 129,770
----------- -----------
Commitments
Stockholders' equity:
Common stock - Pound/Sterling 1
shares; 70,000,000 shares
authorized and 59,050,000
shares issued 59,050 59,050
Foreign currency translation
adjustment 2,500 200
Accumulated deficit (2,812) 980
----------- -----------
Total stockholders' equity 58,738 60,230
----------- -----------
278,061 190,000
=========== ===========
</TABLE>
<PAGE>
<TABLE>
SDT Holding Corp.
Consolidated Statement of Operations and Accumulated Deficit
- -----------------------------------------------------------------
<CAPTION>
3 months ended December 31st 1996 1995
- ---------------------------- ----------- -----------
<S> <C> <C>
Pound/Sterling Pound/Sterling
'000 '000
Revenues 8,443 7,675
Cost of revenues 5,514 5,154
----------- -----------
Gross profit 2,929 2,521
Administrative expenses 681 543
Amortisation expense 15 15
----------- -----------
Income (loss) from operations 2,233 1,963
Interest income and similar income 63 58
Interest expense (108) (101)
----------- -----------
Income (loss) before taxes on income 2,188 1,920
Taxes on income (1,000) (900)
----------- -----------
Net income (loss) 1,188 1,020
=========== ===========
</TABLE>
<PAGE>
<TABLE>
SDT Holding Corp.
Consolidated Statement of Operations and Accumulated Deficit
- -----------------------------------------------------------------
<CAPTION>
6 months ended December 31st 1996 1995*
- ---------------------------- ----------- -----------
<S> <C> <C>
Pound/Sterling Pound/Sterling
'000 '000
Revenues 16,000 10,000
Cost of revenues 10,700 7,000
----------- -----------
Gross profit 5,300 3,000
Administrative expenses 920 750
Amortisation expense 30 20
----------- -----------
Income (loss) from operations 4,350 2,230
Interest income and similar income 120 75
Interest expense (210) (125)
----------- -----------
Income (loss) before taxes on income 4,260 2,180
Taxes on income (2,000) (1,200)
----------- -----------
Net income (loss) 2,260 980
=========== ===========
<FN>
*Lupa Marine (UK) Ltd not purchased until 4.9.95
</TABLE>
<PAGE>
<TABLE>
SDT Holding Corp.
Consolidated Cash Flow Statement
- -----------------------------------------------------------------
<CAPTION>
6 months ended December 31st 1996 1995*
- ---------------------------- ----------- -----------
<S> <C> <C>
Pound/Sterling Pound/Sterling
'000 '000
Net cash inflow from operating
activities 800 400
Returns on investments and
servicing of financing
Interest paid - -
Interest received 5 3
Interest element of finance lease
rental payments (205) (103)
----------- -----------
Net cash outflow from returns on
investments and servicing of
finance (200) (100)
Taxation
UK corporation tax paid - -
----------- -----------
Tax paid - -
Investing activities
Purchase of tangible fixed assets (15) (571)
Purchase of subsidiary undertaking
(net of cash and cash equivalents) - (195)
Net cash outflow from investing
activities (15) (766)
----------- -----------
Net cash inflow / (outflow)
before financing 585 (466)
Financing
Capital element of finance lease
rental payments (45) (24)
----------- -----------
Net cash outflow from financing (45) (24)
----------- -----------
Increase in cash and cash equivalents 540 (490)
=========== ===========
<FN>
*Lupa Marine (UK) Ltd purchased in September 1995
</TABLE>
<PAGE>
<TABLE>
SDT Holding Corp.
Consolidated Cash Flow Statement
- -----------------------------------------------------------------
<CAPTION>
3 months ended December 31st 1996 1995
- ---------------------------- ----------- -----------
<S> <C> <C>
Pound/Sterling Pound/Sterling
'000 '000
Net cash inflow from operating
activities 428 389
Returns on investments and
servicing of financing
Interest paid - -
Interest received 3 3
Interest element of finance lease
rental payments (111) (101)
----------- -----------
Net cash outflow from returns on
investments and servicing of
finance (108) (98)
Taxation
UK corporation tax paid - -
----------- -----------
Tax paid - -
Investing activities
Purchase of tangible fixed assets (15) -
Purchase of subsidiary undertaking
(net of cash and cash equivalents) - (3)
Net cash outflow from investing
activities (15) (3)
----------- -----------
Net cash inflow / (outflow)
before financing 305 288
Financing
Capital element of finance lease
rental payments (24) (22)
----------- -----------
Net cash outflow from financing (24) (22)
----------- -----------
Increase in cash and cash equivalents 281 266
=========== ===========
</TABLE>
<PAGE>
SDT HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996
(unaudited)
1. Unaudited Interim
Financial
Statements The accompanying unaudited financial statements have been
prepared in accordance with the instructions for Form 10-Q
and do not include all of the information and footnotes
required by generally accepted accounting principles
for complete financial statements. In the opinion of
management, all adjustments, consisting only of normal
recurring adjustments considered necessary for a fair
presentation, have been included. Operating results for
any quarter are not necessarily indicative of the
results for any quarter or for the full year. These
statements should be read in conjunction with the
financial statements of European Business Group (UK) Plc.
and notes thereto for the year ended August 31, 1996,
included in the SDT Holding Corp.'s (the "Company")
Amendment No. 1 to Form 8-K dated April 16, 1997.
2. History and
business
activity SDT Holding Corporation (the "Company"), was incorporated
on June 21, 1990 under the laws of the State of Colorado,
to engage in any lawful corporate undertaking,
including, but not limited to, selected mergers and
acquisitions. Until consummating the transaction
described below, the Company had not conducted and
material business operations since its inception. The
Company is a public reporting company under the
Securities Exchange Act of 1934, as amended, but its
securities do not trade as of the date of this report.
3. Business
Combination Effective October 30, 1996 SDT Holding Corporation
acquired the stock of European Business Group (UK),
Plc, ("EBG") in a reverse acquisition in which EBG's
stockholders acquired voting control of SDT. The
acquisition was accomplished through an exchange of stock
in which SDT exchanged 18,000,000 shares of newly issued
common stock for 100% of the outstanding common stock of
EBG, resulting in ownership by the stockholders of EBG
of approximately 82% of the combined company.
The transaction is accounted for as a reverse acquisition
and recapitalization with EBG as the acquiring company
because EBG's stockholders acquired a majority of the
voting rights in the combined company. Under this
method of accounting, SDT's assets and liabilities are
recorded at their fair values which approximates
historical cost and historical financial results reported
by SDT are those of EBG with SDT operations reported
from the date of acquisition forward.
4. Subsidiaries
and
Acquisitions The following were subsidiaries at December 31, 1996, and
have all been included in the consolidated financial
statements.
<PAGE>
Proportion
of voting
rights
and
ordinary
share
capital
Name held Nature of business
_______________________________ ____ ___________________
W Limited 100% Asset leasing
Lupa Marine (UK) Ltd 100% Purchase and sale of
marine containers
EBB Company Finance Limited 100% Business consulting
Crisum Corporate Consulting
Limited 100% Asset leasing and
group administration
Industrial & Trade Consultants Ltd 100% Asset leasing and
advertising,
partnership
investment
EBB Company Management
Limited 100% Marketing of licenses
EBB Trade Management
Limited 100% Advertising agent
EBG Trade Management
Limited 100% Dormant
EBG Corporate Consulting
Limited 100% Dormant
EBG Finance Limited 100% Dormant
EBG License Trade (UK)
Limited 100% Dormant
EBG License Trade (INT)
Limited 100% Dormant
EBG Company Leasing
Limited 100% Dormant
EBG Partner Limited 100% Dormant
EBG Timecharter Limited 100% Dormant
i) Acquisitions in the year
During fiscal 1996 the Company acquired the following
subsidiaries, all of which have been included in the
consolidated accounts using the principles of acquisition
accounting:
Date of % of Consideration
Subsidiary Acquisition Holding (Fair Value)
(Pounds)
___________________ _________________ _______ ____________
Lupa Marine (UK) Ltd September 4, 1995 100% 7,800,000
loan debt
Industrial & Trade 2,200,000
Consultants Limited September 4, 1995 100% loan debt
W Limited October 1, 1995 100% 1 cash
EBB Company Finance
Limited September 4, 1995 100% 225,000 cash
Crisum Corporate
Consulting Limited September 4, 1995 100% 225,000 cash
EBB Trade Management
Limited June 3, 1996 100% 2 cash
EBG Trade Management
Limited September 4, 1995 100% 2 cash
<PAGE>
Date of % of Consideration
Subsidiary Acquisition Holding (Fair Value)
(Pounds)
___________________ _________________ _______ _____________
EBG Corporate
Consulting Limited October 6, 1995 100% 2 cash
EBB Company
Management Limited September 4, 1995 100% (Acquired via
Industrial
& Trade
Consultants
The amount paid for the acquisitions exceeded the fair value
of net assets acquired, which also approximated historical
costs, by Pounds 10,421,770. However of this amount
Pounds 9,534,729 was attributed to net assets acquired from
persons who also own substantial portions of SDT Holding
Corporation. Therefore the Pounds 9,534,729 was written off
against the stockholders' equity of the Company leaving a
balance Pounds 887,041 which was assigned to Goodwill.
Unaudited pro forma results of operations as if the
acquisitions occurred at the beginning of each of the fiscal
years 1996 and 1995 are presented below. The unaudited pro
forma results have been prepared for comparative purposes only
and are not necessarily indicative of what would have occurred
had the acquisitions been completed as of those dates or of
any results that may occur in the future.
1996 1995
(Pounds) (Pounds)
__________ _________
Revenue 30,701,688 8,986,742
Net income (loss) 4,762,898 (4,097,293)
The amounts for fiscal year 1996 are approximately the same as
the consolidated statement of operations for fiscal year 1996
since the acquisitions of the operating companies took place
approximately at the beginning of fiscal year 1996.
5. Stock
Split The Board of Directors declared an eight for one forward split
of the Company's issued and outstanding common stock,
effective for stockholders of record on September 19, 1996.
The share distribution date was October 31, 1996.
6. Commitments On December 5, 1996 the Company entered into an agreement with
Northridge Finance Limited and Roseworth Financial Services
Limited whereby the Company assigned an amount of Pounds
1,410,000 due to the Company by Nadelar Business
Corporation. As consideration for the assignment the
Company was released from its obligations under
a loan agreement for Pounds 2 million.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS FILED WITH FORM 10-Q FOR THE FISCAL QUARTER
ENDED DECEMBER 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> POUNDS/STERLING
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1.6616
<CASH> 4
<SECURITIES> 0
<RECEIVABLES> 4,789
<ALLOWANCES> 0
<INVENTORY> 16,348
<CURRENT-ASSETS> 45,425
<PP&E> 43,259
<DEPRECIATION> 1,246
<TOTAL-ASSETS> 278,061
<CURRENT-LIABILITIES> 47,544
<BONDS> 0
0
0
<COMMON> 59,050
<OTHER-SE> (2,812)
<TOTAL-LIABILITY-AND-EQUITY> 278,061
<SALES> 8,443
<TOTAL-REVENUES> 8,443
<CGS> 5,514
<TOTAL-COSTS> 5,514
<OTHER-EXPENSES> 2,233
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (90)
<INCOME-PRETAX> 2,188
<INCOME-TAX> (1,000)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,188
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
